Metal Exchange

Supply concerns push copper prices higher

Paul Ploumis
February 18,2019 08:19 AM
Supply concerns push copper prices higher

LONDON, Feb 18 (Reuters) - Copper prices rose on Monday, with traders concerned that supply will be tight after a court ruling cast doubt on the future of a smelter in India and a large mine in Indonesia said its export permit had expired.

Better than expected Chinese lending data on Friday, meanwhile, suggested that demand from the world’s biggest consumer of metals will remain strong.

Benchmark copper (CMCU3> on the London Metal Exchange (LME) was up 0.8 percent at $6,239 a tonne at 1123 GMT, heading towards a two-month high of $2,289.50 reached on Feb. 7.

Stockpiles of copper in Shanghai Futures Exchange warehouses have risen sharply in recent weeks CU-STX-SGH, but inventories available to the market in LME-registered warehouses are near 13-year lows. MCUSTX-TOTAL

LME time spreads have also tightened, suggesting that supply of nearby material has tightened. MCU0-3

There is little sign of a serious supply shortage, however, Deutsche Bank analyst Nick Snowdon said, adding that the outlook for U.S.-China trade negotiations and global economic growth remained the most important driver of copper prices.

VEDANTA: India’s Supreme Court set aside an order by an environmental court that cleared the way for the reopening of Vedanta’s southern Indian copper smelter, in a blow to the company’s plans to begin operations.

GRASBERG: PT Freeport Indonesia, which operates the Grasberg mine, one of the world’s largest, said its copper concentrate export permit expired on Feb. 15 and it had not received recommendations from the mining ministry that will help it to obtain a new permit.

TRADE WAR: The United States and China will resume trade talks next week in Washington, but U.S. President Donald Trump repeated on Friday that he may extend a March 1 deadline for a deal and keep tariffs on Chinese goods from rising.

TARIFFS: The U.S. Commerce Department sent a report on Sunday to President Trump that could unleash steep tariffs on imported cars and auto parts.

COPPER POSITIONING: Speculative investors are betting on lower copper prices. They held a small net short position as of last Thursday, according to brokers Marex Spectron.

LME STOCKS: On-warrant copper stocks in LME warehouses at 73,850 tonnes are down from about 130,000 tones in January. MCUSTX-TOTAL

WARRANTS: Adding to concerns of a supply squeeze, one entity held 50-79 percent of LME copper warrants. <0#LME-WHL>

SPREAD: Cash copper has flipped to a $5 premium against the three-month contract from a $15 discount a week ago MCU0-3, suggesting lower availability of nearby supply.

METALS PRICES: LME aluminium was down 0.4 percent at $1,852 a tonnes, zinc lost 1.4 percent to $2,617.50, nickel slipped 0.2 percent to $12,380, lead fell 1.6 percent to $2,044.50 and tin was down 0.1 percent at $21,175.

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